New report explores finance and policy futures of English local government

Local Government

New report explores finance and policy futures of English local government

15 Oct 2014

A new report from Grant Thornton UK LLP, produced in collaboration with the University of Birmingham's Institute for Local Government Studies (INLOGOV), suggests that fundamental changes to local government are both operationally necessary and constitutionally inevitable, in order for the sector to remain relevant by 2020.

Launched today, the report offers a thorough analysis of the current political and economic context and explores a range of potential future policies and outcomes that English local government will need to adopt and strive towards as they seek to adapt and overcome these challenges.

Placed in the context of enhanced devolution, following the Scottish independence referendum, 2020 Vision maintains a wary eye fixed on the 2015/16 Spending Round and looks ahead to the life time of the next government. It highlights that the economic and financial situation remains increasingly untenable, with an expanding North/South divide arising from the pattern of funding reductions and economic growth.

Recognising that local authorities throughout England continue to face unprecedented challenges, not just relating to the pressures of austerity and central government funding reductions but also to those of demographic and technological change, its authors highlight the vital role of a successful local government sector in society and encourage it to continue to think hard about how it will cope in the future.

Informed by the views of a broad range of local authority leaders, chief executives and other sector stakeholders, the report offers a set of six forward-looking scenarios* in which councils could be operating within by 2020. Though not mutually exclusive, the authors suggest that key stakeholders need to take urgent action to avoid a potential slow and painful demise for some councils by 2020.

Paul Dossett, Partner and Head of Local Government, Grant Thornton UK LLP, commented: "The pressures local government are under – financial and operational – will magnify exponentially over next 10 years. With funding reductions due to bite harder and deeper after 2015, and many councils already facing a potential 'tipping point', authorities will need to maintain a relentless focus on transforming the models that have largely served them well over the past generation. For local authorities to remain relevant and able to deliver the services which the public relies on them for, a radical change in thinking is necessary. This can only be achieved through open, honest and collaborative dialogue between policy makers at all levels of government. In our view this must come with significantly greater financial devolution and tax raising powers, in order for the local authority of the 2020's to have any meaningful purpose."

Catherine Staite, Director at INLOGOV, added: "The report highlights both the risks to local government of incremental decline and the opportunities which could come at this pivotal moment through active leadership, innovation and above all, collaboration. Collaboration requires maturity and a focus on better outcomes rather than on structures and systems. Local government will need to be able to speak to central government coherently and convincingly before there is any hope of them letting go. That applies whatever the political make-up of the government. Maintaining petty divisions and refighting old battles gives central government all the excuse it needs not to devolve. The most forward looking local authorities are demonstrating just how much can be achieved, even in a time of great austerity. It’s important for the future of local government and the interests of the people we all serve that the rest catch up with the best - and quickly."

* Scenarios (in brief) identified within report:

Adaptive innovation: councils creatively redefine their role and are able actively to affect their operating environment, often working in close partnership with other authorities

Running to stand still: councils are led and managed well and can see a positive future, provided that they can keep up the current pace and that there are no major shocks

Nostril above the waterline: councils are only able to act with a short-term view, their existence is hand to mouth and even a small external change might seriously challenge their viability

Wither on the vine: councils have moved from action to reaction. Their finances and capacity are not sufficient to the task and they are retreating into statutory services run at the minimum

Just local administration: councils have lost the capacity to deliver services, either because they have 'handed back the keys' or because responsibility for significant services has been taken from them

Imposed disruption: councils are subject to some form of externally imposed change, such as local government reorganisation

For more details and to download a copy of the report, please visit our 2020 Vision hub.